On Nov 21, 2013 while addressing election rally in Agra, BJP's Prime Ministerial candidate Narendra Modi promised to provide one crore jobs to the youth of the country, if voted to power at the Centre. He became PM in 2014 and at the end of his 4 of 5 year tenure, Modi stares at elusive jobs against the backdrop of debacle of his disruptive reforms like demonetisation, GST etc and growing realization that the government will not be able to create formal jobs for over 6-7 million joining the country’s workforce annually. In 2016-17, actual jobs created were just 4.1 lakh as against the BJP’s electoral promise of creating one crore jobs annually. Unable to destroy non-tax paying informal sector and expanding tax paying formal sector, Modi is now embracing informal sector for his 2019 electoral campaign. 'Pakorawallah' is an indication of his newest mind game.
- Creating jobs is India’s biggest worry and it will only get worse.
- India is expected to have 100 crore people aged between 15 and 64 years of age by 2027, which means the world’s largest and youngest workforce. As the economy progresses, millions of people employed in low productivity farm sector will have to be moved to higher-productivity non-farm jobs. Barring China, this scale of migration has no precedent in history.
- India’s self-employed is and will remain humungous. Self-employment is common in India. Sometimes, it is out of choice but more often it is out of compulsion.
- They represent 47% of India’s 470 million workforce. They include street vendors, rickshaw pullers, carpenters, plumbers, chaiwallahs, grocers, taxi drivers, doctors, accountants, pakorawallahs etc. Most of the self-employed are below the economic radar.
- The scope of tax evasion makes informal sector even more attractive.
- They are homeless, office-less and unbanked. They are vulnerable and footloose and live on the fringes. They rarely figure in government policies or statistics, or even statements.
- Self-employed is not a homogeneous group. Income instability is their biggest problem. One serious illness can set them back by several years.
- With economic growth regular and casual workers have risen while the number of self-employed has dipped. ILO says 77% of Indian workers will be engaged in vulnerable employment by 2019.
- Last month, self employed pakoda sellers made headlines when Modi said, “Youth selling pakora outside… and earning Rs.200 a day also means creation of jobs.”
- The Economic Survey 2018 defines formal employment as, one, where the employers are providing some kind of social security (like EPF and health or life insurance) to their employees, and, two, where firms are part of the tax net. According to the first definition based on social security, 31% of India’s non-agricultural workforce, 75 million out of an estimated at 240 million, have formal employment. According to the employers-in-the-tax-net second definition, 54% (or 127 million) of the non-agricultural workforce is in the formal sector. What is it Modi is trying to convey by redefining 'employment' with his own way?
- Mudra loans are disbursed for non-agricultural activities, including dairy, poultry and beekeeping. 90% of the loans to over 10 crore beneficiaries in last three years were under the ‘Shishu’ category averaging Rs 43,000. Labour ministry might be working out a formula under which 40-50% of the 104 million beneficiaries of the Pradhan Mantri Mudra Yojana could be bracketed as employed.
- If India has to progress, mainstreaming its 470 million self-employed will be an important stepping stone. Modi knows that confronting unemployment head-on rather than sidestepping it may be a smarter strategy.
- India’s IT industry is in a crisis, with technological changes forcing them to pivot or perish. Almost 65% of its 4 million IT workers are not retrainable and runs the risk of losing jobs.
- The degree of disruption technology will cause, with the automation wave is certain to cull jobs.
- If we want growth with jobs, the push has to be on small industries, and not on the middle or the top. But the biggest beneficiary of initiatives like 'ease of doing business' will be the MSMEs who also bear the biggest brunt of the inefficiencies in the system.
- India's employment elasticity – number of jobs created per percentage of GDP growth — has been among the lowest. It is now declining – from 0.3% between 1991 to 2007 has halved today. This is mainly because India’s growth, dominated by the services sector and not labour-intensive manufacturing, has a bias for skilled workers.
- The majority of India’s workforce is engaged in informal, unorganised, low-income, low-productivity jobs. This is not self-employment. This is self-exploitation. They need to be moved up from 'subsistence-based livelihood' to 'good self-employment'. Policy makers should focus on increasing formal wage employment and good self-employment.
The Modi government, in its last year, is short on time. And India’s job seekers short on patience. In politics, perception management is as important as the change on the ground. Modi government likely to lean 'more on perception management' with narratives, publicities and media management rather than any change on the ground to face general elections in 2019.
Political language makes lies sound truthful and murder respectable but Modi must remember that he can't fool all the people all the times despite his oratory skills and media management. Voters have their own way of understanding what is good for them and whom they should vote. Narratives and money power works some times only. Rajasthan bye poll results has already sent spine chilling message to Modi which is reflected by Amit Shah's lackluster postmortem analysis. Surfacing scandals is another cause for worry for Modi. Above all rising graph Rahul Gandhi gives him sleepless nights.
- In the recent past a report indicates the falling value of wage labour against the accumulation of wealth as dividends and share capital. Another report hints towards the dismal conditions in which Indian workers are forced to work and eke a living.
- An ILO report estimates that over 77% of the active workforce (not counting the unemployed) will be in vulnerable employment by 2019. ‘Vulnerable employment’ is defined as as self-employed without paid employees and contributing family workers. In India ‘vulnerable employment’ encompasses contractual workers in the organised sector and workers in the unorganised sector.
- Grave conditions exist in which the workers, producing high value branded garments, are forced to work in Bangalore. It also reports that women are lured by false promises of wages and held under pressure to work for low wages.
- A major labour reform is being pushed by the corporate sector to formalise the contract labour system that enables ‘fixed-term employment’ by industries. The new labour rules would allow the companies to shift the risk of the business cycle on the workers. This allows companies with less than 300 workers to close down or retrench workers without prior notice and approval. Presently in most states, the limit is set at below 100 workers.
- The complex tax regime with multiple exemptions leads to a skewed burden of taxes. It identifies that apart from allowing larger companies to pay a much lower rate of tax than smaller companies, exemptions for accelerated depreciation incentivises capital-intensive production rather than the use of labour. The effective tax rate for companies with turnover less than Rs. 1 crore is above 30% while companies that make over Rs. 500 crores pay less than 26% in taxes.
- The UK - India Business Council (UKIBC) and the Confederation of British Industry have together written to the Indian government seeking a lowering of corporate taxes and implementing reforms to further dilute labour laws. The lobby groups have argued that such measures would improve the ease of doing business in India and also help increase British investments in India.
- The workers had been working in abysmal conditions for meagre wages ranging from Rs. 6000/- to Rs. 10000/-. The reasons for accidental deaths go beyond violations of norms but is more systemic. Women suffer disproportionately as they are exposed to informal work. A labour activist points out that labour laws are brazenly violated.
- Trade unions have staged demonstrations and road rokko in various cities of Tamil Nadu voicing their dissent against the central and state government’s economic policies. The demands included a raise in minimum wage to a living wage, end to contractualisation and ‘anti-labour’ policies, the protests focussed on price rise, hike in transport fares in Tamil Nadu and the dismantling of the Public Distribution System which has been the hallmark of the welfare system in Tamil Nadu.
- Belying the opinion that India is creating far fewer jobs (or even bleeding jobs), a new report, published by a professor of economics at IIM Bangalore and Chief Economic Advisor of SBI, has concluded that we are headed towards creating 7 million (70 lakh) jobs by the end of the financial year 2017-18. This has led to a furious debate over the issue of job creation in India in the last few years.
- The biases that could have crept into the data is that the threshold of 20 employees for EPFO registration might lead to a false growth when a company that has 19 workers increases its payroll by 1. While the net increase is just 1, EPFO will record a growth of 20. It also does not delete accounts immediately when jobs are lost. An amnesty scheme announced two years back has brought in many workers into the ambit. This cannot be claimed as new employment. Thus, EPFO is not the best source to estimate net growth in jobs.
- It is argued that at a time when the economy has been jolted by shocks such as Demonetisation and GST implementation that have adversely affected the unorganised sector, it cannot be ‘wished away’ by cherry-picking data.
The attitude of our central & state governments to dole what ever concessions MNCs ask to set up their manufacturing units in the name of generating some jobs and indirect economic benefits is fundamentally defective. These industries apart from tax concessions will have to be given land at throw away prices ruining the poor farmers but also precious resources like water & electricity are to be diverted for their use. The pollution and climatic impact and industrial waste dumped in our land fills is incalculable. The cultural impact is another thing. If these negatives are loaded to the benefits, the net benefit would be negative. Labor reforms exposing workers to be exploited by these industries is nothing but height of insanity. Unlike IT employees these workers whenever they are retrenched getting alternate jobs wouldn't be easy and the agony they and their families undergo in the absence of robust social security is unimaginable. Therefore we should do what ever is good for our society especially poorer classes. No point in solving one problem and creating a much bigger problem.
